From 1st July the Council of Mortgage Lenders is integrated into a new trade association, UK Finance. For the time being, all UKF mortgage information will continue to be published on this website, and UKF member-only mortgage information will only be available here.

UK Finance represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation takes on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Please go to www.ukfinance.org.uk for wider content and updates from UK Finance.

Most houses are freehold, but most flats are leasehold. When you buy a leasehold property you are not really buying the bricks and mortar or the land on which the property sits; you are buying the right to inhabit the property for the term of the lease.

Often, this may seem to amount to the same thing (where the lease is for 999 years, for example). But on properties which are getting closer to the end of their lease, the lender will need to take account of the effect of this on the future marketability of the property, and hence the effect on the property as security for a mortgage.

Leases can (at a cost) be extended. However, if you are hoping to buy a property with a relatively short lease (less than 70 years remaining, say), you should take advice on whether you would be able to extend the lease, and how much this would cost. Lenders will normally require leases to extend for at least 40 years beyond the end of the mortgage, as a minimum, because the value of the property will become lower as the remaining period of a lease gets shorter.

More information about new build leasehold properties can be found here.